Rule 23 — ZCB discount (s. 32(d)) | Income Tax Rules, 2026

Rule 23 explains how the pro rata amount of discount on a zero coupon bond for a tax year is worked out for section 32(d): convert the bond's life to calendar months, spread the discount evenly, and multiply by the months falling in the tax year.

The steps (sub-rule 1).

Convert the life to months. Express the period of life of the bond in calendar months. Where the month of issue, or of maturity or redemption, contains only part of a month, a part of fifteen days or more is rounded up to one calendar month; a part of less than fifteen days is ignored.
Spread the discount. Divide the amount of discount by the number of calendar months from step 1.
Apply it to the tax year. Multiply that monthly amount by the number of those calendar months that fall in the tax year. The result is the pro rata discount for that year.

Related provisions. Rule 7 (notification of zero coupon bonds); section 32(d), which defines "discount" and "period of life of the bond".

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